Businesses are once again on the clock to file their beneficial ownership information with the Financial Crimes Enforcement Network.
The U.S. Court of Appeals for the Fifth Circuit Monday overturned the nationwide preliminary injunction granted earlier this month by the U.S. District Court for the Eastern District of Texas on compliance with the Corporate Transparency Act.
Following the court’s decision, FinCEN posted on its website that businesses created prior to Jan. 1, 2024, will have an extension to file their initial information until Jan. 13, 2025. The deadline was Jan. 1, 2025. Extensions of the deadline to Jan. 13 were also given to businesses created or registered on or after Sept. 4, 2024, or had qualified for disaster relief. Businesses created between Dec. 3 and Dec. 23, 2024, are being given an extra 21 days to file.
Effective Jan. 1, 2024, the CTA requires many companies, including many NIADA dealer members, to report information about their beneficial owners to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The information was due by Jan. 1, 2025, for entities in existence as of Dec. 31, 2023, and within 90 days of formation for entities that were formed in 2024.
Corporations, limited liability companies and limited partnerships are required to file with limited exceptions.
Required information to be reported in the initial BOI report about the reporting company includes: (a) its full legal name; (b) any trade names, “doing business as”, or “trading as” names; (c) the current street address of its principal place of business if that address is in the U.S., or, for reporting companies whose principal place of business is outside the U.S., the current address from which the company conducts business in the U.S.; (d) its jurisdiction of formation or registration; and (e) its Taxpayer Identification Number.
Required information to be reported in the initial report about each beneficial owner include: (a) the individual’s name; (b) date of birth; (c) residential address; and (d) an identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document.
The penalties for filing false beneficial ownership information or for failure to report or update beneficial ownership information are: (i) civil penalties of $500 for each day that the violation continues or has not been remedied; and (ii) a criminal fine of up to $10,000, imprisonment for up to two years, or both.
In issuing the stay of the preliminary injunction in the case Texas Top Cop Shop vs. Merrick Garland, the Court of Appeals judges wrote: “When balancing this harm against the public’s urgent interest in combatting financial crime and protecting our country’s national security, equity favors a stay. As the government explains, and the district court recognizes, a last-minute nationwide preliminary injunction would undermine our ability to push other countries to reform their anti-money laundering and counterterrorism regimes and to address the most fundamental gap in our own regime. Accordingly, the government has demonstrated that a stay is warranted.”
The Court of Appeals judges noted FinCEN’s estimate that companies would spend approximately 90 minutes to complete and file the report. The financial cost is estimated at $85 of labor time.
